Best Way to Trade With Zigzag EA
The principle of every trader is to enter the market when it is high or low depending on their strategy. If two traders enter the market at the same price, but in a different direction, one will lose while the other will gain. Although analyzing the next move of the market is not easy, a lot of traders take advantage of the highs and lows in the market. And that’s where an indicator like Zigzag EA makes a lot of difference.
If you realize, there is no one way to make money trading. Each trader has a strategy. However, a common strategy among new traders is to trade the highs and lows of the market. The zigzag pattern gives traders an unobstructed view of the market on different time frames.
However, you can’t just take any area as high and low; you need specific areas to identify these points as you won’t use any area as high or low. The market doesn’t move in a straight direction. It moves in swings – up and down. To trade these swings, traders use a lot of tools, including indicators. Nevertheless, one profitable tool that seems to resonate with a lot of traders is the Zigzag indicator.
Naturally, MetaTrader comes with a default zigzag indicator that a lot of traders tend to use to identify the highs and lows of the market. In this article, you will learn how to insert the Zigzag indicator on your trading platform.
The Zigzag EA indicator
The zigzag indicator is a famous technical indicator that technical traders use to measure the swing highs and low of the market. It helps traders identify the highs and lows in the market with better accuracy. Alternatively, some traders use it to filter noise when trading. Eliminating noise helps to give a better picture of the market.
You can use the Zigzag indicator for various situations such as:
1. Channels and patterns
2. Fibonacci tools
3. Spotting tops and bottoms
4. Harmonic patterns
5. Entry points
The Zigzag indicator uses sectional lines to connect the tops and bottoms of price movement. The indicator eliminates any changes in price that is lower than the value of its parameter. Therefore, it only highlights important changes. Nevertheless, in most situation, it only highlights essential changes in the market.
How to get the Zigzag Indicator
The zigzag indicator is available for traders to use when trading. It comes as a default indicator in different trading platforms such as MetaTrader. To use the indicator, you have to apply it on a chart. You can access the indicator through the Navigation Panel of your trading platform.
Additionally, there are custom zigzag indicators that you can use. However, these indicators come with different settings, which you can reconfigure to suit your trading style. Still, it would help if you don’t depend on the zigzag indicator as to your sole tool for confirming trades.
Calculating the Zigzag EA manually
To understand how to use the zigzag indicator better, you need to know how the indicator performs its calculation. You choose the starting point, which is normally from the swing high to low. Then you select the %price movement.
Furthermore, you have to identify the next swing low or high, which is different from the starting point. Then, you draw a trendline from the start to the new point you identify. Finally, repeat the process using the most recent swing low or high.
Can you use Zigzag Indicator on all timeframes?
The zigzag indicator is not limited to any particular timeframe, which means you can even apply it on a one-minute timeframe to yearly timeframe. Notwithstanding the short-term or long-term analysis, the indicator uses the same principle.
However, lower timeframes can have noise, which might affect your trade performance. Nevertheless, a suitable timeframe for its implementation will be on a 4-hour and daily timeframe. You can combine it with the Fibonacci retracement tool to fine-tune your entry or exit points since it uses the same concept of Elliot Wave theory.
Zigzag Indicator Mistakes to Avoid
Despite how easy an indicator can be, there are some mistakes people make. These mistakes are not limited to new traders alone. Even expert commit such mistakes, which is why you have to know common mistakes when using the zigzag indicator.
Mistakes 1: Using Zigzag Indicator without other tools
In as much as the Zigzag indicator help identify swings high and swing lows of the market, it shouldn’t be used on its own. It is not a powerful tool to give you exact information about the current state of the market. If you want to use the zigzag indicator, you need another tool like Fibonacci retracement or moving average to confirm if it is the swing high.
Mistake 2: Performing too much manual calculation
Performing a lot of customization can affect the performance of the indicator. It can lead to a series of issues. Although using your settings might be suitable for you, there is a high chance of generating inaccurate results. It doesn’t mean you can change the calculation, but depending on the algorithm might be a better idea.
Mistake 3: Not understanding the Elliot Wave Theory
To understand the Zigzag indicator better, you need to know how the Elliot wave theory operates since they act similarly. The zigzag indicators use the same concept of the Elliot wave theory.
Summary of Zigzag EA 2021
There are no short cuts to success, and Zigzag EA too have its limitations. However, when using it, you have to remember that the last wave might extend as it trails the price. This makes it a repainting indicator, but you can still consider it a standard indicator.
With beginners, you can use the zigzag indicator to ascertain the current trend of the market. You can include it as one of your weapons when trading the financial market.
Finally, you can use it to draw channels, trendlines, identify chart patterns, adjust your trailing stop loss, draw support and resistance levels and place stop-loss order. You can find more useful tools on our website to help you perform better.